The Competition Authority of Kenya (CAK) and Central Bank of Kenya (CBK) has okayed Access Bank proposal to acquire 93.57 per cent of Kenyan based lender Transnational Bank Ltd.
Access Bank is Nigeria’s largest bank following the merging of operations with Diamond Bank of Nigeria – Diamond transferred all its assets, liabilities, and undertakings to Access Bank.
Transnational Bank was established in 1984 as a non-financial institution and has grown to a Tier 4 bank focusing on the agricultural sector. Transnational Bank reported a full-year pretax loss of Ksh 98.5 million in 2018 with NPLs increasing by 58 per cent to Ksh1.85 B while loans rose 0.5 per cent to Ksh 6.663B.
Access Bank is pursuing Pan African expansion ambitions with interests in East Africa using Kenya’s position as the regional hub.
Access Bank proposal for the acquisition of a controlling equity stake received a nod from the Central Bank of Nigeria.
Consolidation in the banking sector
The Kenyan banking industry has been witnessing consolidation which CBK believes will leave well-capitalized players that will be able to catalyze economic growth.
For instance, the NIC –CBA merger occurred earlier this month while KCB just completed the acquisition of National Bank. Mauritius SBM Holdings Ltd late last year completed the acquisition of assets belonging to collapsed Chase Bank Limited and the entire capital of Fidelity Commercial Bank Ltd.
Furthermore, CBK notes that consolidation improves resilience to capital shocks and lowers compliance costs.
Kenya has more banks per person than South Africa and Nigeria, Africa’s two largest economies, with 40 lenders and a population of more than 50 million.